Air France-KLM, CCO, Angus Clarke at the CAPA Airline Leader Summit Airlines in Transition 2025

Transcript

Angus Clarke:Well, we're seeing continued strength in premium. So business, premium economy, first class at Air France, that's all pretty good. Economy Plus, which is, you know, a 34, 35-inch pitch product, no problem there. The yields are good, but we are seeing a decline in the economy cabin on the Atlantic. Still, in terms of RASK, we're at or above last year. So that's That's okay. But so I think we've had a really record performance over the last 4 years. But, you know, costs are creeping up as well. So it's a balance, but it's, it's concerning. You know, we were wanting to have a record year this year in terms of EBITDA. We're trying to maintain, maintain that. But it just— it's all going to come down to what Trump does next, I think. I think we wanted a few years of sort of record earnings to make up for the COVID years. But now we're taking some steps in the winter to have zero growth. We're going to retire some widebodies, just one or two, just a little bit early. The, the older A330s. That's the first step. I mean, if it really sets in to be much deeper, we're going to have to look at recruitment freeze, which we haven't contemplated yet, and more widebody reductions. But look, it's— you've got to remember, we're still above last year in RASK and the outlook is still at or above. It just could be one of those years that's a bit okay, but not terrible. So the alarm bells, we've noticed it, but the alarm bells aren't ringing yet. Look, I'd say the relationship's been static over the last few years, so no major improvements. We've been able to get some new lounge infrastructure approved at Charles de Gaulle. So that's, that's benefit for the customer. The French government's done a bit about easing the border. There are more— they have like non-police employees now doing the borders and stamping the passports. I mean, well-certified people. So that's really cleaned up the delays in the queues at Charles de Gaulle. Amsterdam, they're all still official employees and police. So it's a bit slow at the border in Amsterdam. But again, a lot of it's European to European. And certainly the Schengen citizens have a fast path. The Schengen zone citizens have a fast path. It's really for foreign national non-Schengen zone citizens that it's a bit slower. But no, generally it's pretty good. Obviously, there's— there are always environmental and political issues around the Netherlands at the moment. I think that's heading in a positive way where the new government is certainly more receptive to KL. And I'd say the relations are stable to positive with the government and the airport. New airport CEO at Amsterdam is also a breath of fresh air. So that's good in terms of traffic interchangeability of traffic between our network and their network. It's actually exceeding our plan in terms of what we're getting out of the Nordics. So we're very, very strong in the Nordics. Obviously can't talk about price just yet because we haven't had European Commission approval to do that. Next step would be within the timeframe that we outlined, full takeover or not, probably full because some of the investors may want to stay in, but certainly control. We go down the regulatory path for that. No, I think we're pretty, pretty positive on it, actually. They have a great customer base. It's a good airline, solid airline, good management team. I think it's just going from strength to strength. What we've got to do is work out how we integrate a 3rd airline into the group. But I think that actually makes things easy. It's, you know, got 3 different nationalities. Well, you've really got 5 different nationalities once SAS comes in. So, no, it's all— it's going well. Bit of headwind for them because of the weak currency. But now the US dollar's got a bit weaker. That should balance out. But No, it's— we're happy. Well, there are a lot of— I mean, there are certainly A320, A321neos on the ground without engines from both manufacturers. We have CFM on ours. So we have aircraft delays largely related to lack of engine delivery. Also the supply chain for overhauls, even with everyone's focused on Pratt, but GE have issues as well. Rolls-Royce have issues as well. So it's what I alluded to a little bit in the presentation that the casters and forgers, let a lot of experienced people go and you can't make it up that quickly. So I think we're, we're in this cycle for another 5 years, which everyone says, when is it going to end? It might not end that quickly. Look, I think we've set a really interesting business model. We've bet big on the A350 and that's paying off big time because they're delivering. Even though I alluded they're a bit late, they're not so late that it matters. But Airbus are delivering planes well enough to us. We have a good relationship with them. So our entire profit recovery strategy is based on that. So again, the rest of the year, business as usual, premiums working really well. So we've got, we've got more planes delivered with more premium cabins. So I think that strategy is really playing out nicely, sort of copying what BA has done years ago. But no, it's, it's where I don't want to say I'm optimistic because you just don't know what the next turn is with geopolitics and, and the United States. Look what India is happening with India and Pakistan this week. So It just keeps going and going and going. So I think we're well placed. I think if, if there is a downturn, it'll be universal. It won't be specific to us.

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